APICS Houston President Message - Supply Chain Risks & the Failure to Plan for the Unexpected

Dear Fellow APICS Houston Members,

Recent years have seen a substantial increase in digital transformations and artificial intelligence (AI). As supply chain capabilities evolve with emerging technologies, companies operate as integrated end-to-end business model – as a result, the game to manage risk has changed, from managing supplier risks and analytics, to preparing for system failures and supply chain security.

2020 will be the year to test the resilience of your supply chain. Have you been proactively assessing your supply chain risks? Have you reviewed your supply chain risk management (SCRM) plan? Your plan should assist developing capabilities to prevent disruptions and minimize the impact of disruptions through your readiness assessment, quick response, and recovery plan.

Epidemics/Coronavirus, Chinese New Year (CNY) – have you been impacted?

TPM20 – the trans-Pacific and global container shipping, the largest container shipping event, was canceled 24 hours before it started in Long Beach, CA due to COVID-19. Blank sailings have been incorporated into the schedules, as of March 1st, the volume loss due to blank sailings was at 1.9M TEU; at a rough average freight rate of $1,000 per TEU, this equates to revenue loss of $1.9B for the carriers as reported in Seatrade Maritime Times. Factories in China are still struggling to get back to normal production levels. Multinational companies have warned that they will fall short of revenue goals for H2 and are putting at risk annual financial results due to stall production in China.

I often hear comments from people working outside the Supply Chain arena saying “Chinese New Year” (CNY) is only 2 weeks – so why does Supply Chain make a big deal of this and start planning in October? These comments lack the full understanding of the end-to-end impact in the entire global supply chain as well as their risks. After factoring in all variables, the actual impact is 6-8 weeks’ time to reach same production levels prior to CNY. I admit, the 2020 resilience test is an unusual due to the stall production due to the epidemic outbreak right after CNY.

Could you have done anything different in your strategic sourcing? We don’t know when natural disasters, global warming, epidemics, trade agreements, and other disruptions are going to happen, but we do know they will happen again. The failure to adequately evaluate, prevent, and minimize potential supply chain risks can ruin a business. The risks are serious, from losing market share to business extinction because of failing to predict the risks of changing conditions in your supply chain.

Additionally, as we enter into the next decade with Industry 4.0 driving transformations in manufacturing, supply chain, distribution, and retail. This digital disruption requires companies to rethink the way they design their supply chain and deliver products/services. As we develop new business models, we should also assess our supply chain readiness for potential disruptions and develop your SCRM plan.

In closing, I like to highlight some key events and accomplishments:

2020 Technology Innovation Summit – March 25th @ Hilton Galleria
- In response to the rise of AI, our 2nd Technology Innovation Summit will focus on AI. Industry experts will discuss the milestones, trends, and challenges.
- Showcasing: meal delivering robots and traceability/transparency winery project.
ASCM Deloitte Supply Chain Case Competition: The UoH Team won the District Round and moved to the final at ASCM International Conference in New Orleans in September.
New Website: APICS Houston launched a new upgraded website on March 1, 2020.

I wish all a very happy spring break with your family and friends. I hope to see you all on March 25th at the 2020 Technology Innovation Summit. Go to Apics-hourston.org for registrations.

Please remember that our volunteers are making a difference in our community. I’m sure you’ll also enjoy these opportunities to serve, grow, and to make others feel better because of your service. If you are interested please send me an email to President@Apics-Houston.org. Space is limited.

Best,

Dave Cabello

President – APICS Houston